Who's the misallocator?
Of assets, that is.
Steve over at Microsoft? Looks like he took my advice to heart (although I'm not audacious enough to think that he really listened to "little old me") and told Yahoo to get stuffed.
IMHO, that's the right choice. What does Yahoo really bring to the table? Buying eyeballs? Ok, but for that amount of money? Why? Doesn't Microsoft have something else they can spend that sort of coin on that has a better ROI?
You don't buy a business in decline for a premium, and Yahoo has been in decline for years compared to its competitors, primarily Google. Never mind that on a "per pair of eyeballs" basis this looks like a roughly $1000 per deal to me; if Microsoft wants to buy eyeballs they could easily focus on sites where you actually get
unique pairs (like Tickerforum!) rather than Yahoo where, especially on their message boards and email system, the sock puppet problem and anonymous nature of their signup procedure means that you're paying double or even triple an awfully large percentage of the time.
This morning everyone and their brother is telling people to buy Yahoo because "they'll do a deal with someone." The M&A stupidity is back; gee, you think these guys might be angling for some of the M&A work? No, they'd never do that, right? Pull the other one guys.
Last night out of the middle of nowhere we had a huge downward spike in the futures market. Much time and effort was spent trying to figure out if it was a fat-fingered trade (as occurred in January), but Globex said no, and the trades stood.
The interesting thing about this was that it didn't have the appearance of a "fat finger" mistake at the time; it was across all markets, including Treasuries and The Dollar, Gold, and the futures in all three primary indices, and was accompanied with real volume.
Was that someone bailing on a long or getting aggressively short ahead of a potential explosion? Its impossible to know with certainty, but we never did see an actual mushroom cloud, so its difficult to know what was in the mind of person(s) involved. But a 15-handle move in seconds accompanied by volume in the overnight session certainly wakes you up fast when you're casually glancing at your computer!
I'll note that the last time we saw this sort of "overnight dislocation", which at the time was claimed to be a "fatfinger mistake" by Globex (and resulted in thousands of busted trades), we started a precipitous decline in the market that spanned several days the next morning.
This morning CBOE had a "problem" with their consolidated data feeds. Why is this important? Because among other things that prevented anyone from seeing
the VIX, which incidentally was up a
lot on a day when the indices were treading water. A concerted levitation attempt or just random chance?
I don't know, but there is a disturbing pattern here where data feeds have this funny way of disappearing at the most inopportune time, and
it never seems to happen when the market is skyrocketing higher, only when it is threatening to tank.The love-fest was out in force in Omaha this weekend with Berkshire's annual meeting, but those with more brains than fanboyism should pay attention to the results instead of the gushing admiration. Specifically, the monstrous miss that Berkshire posted for its quarterly results, and the forward guidance from Warren that "the easy money has been made", along with his prediction that 10% returns for the business will be difficult to achieve and should be considered "excellent" going forward - for the next several years.
This comment ought to frame reality for anyone who thinks it will all be ok going forward:
"Billionaire Warren Buffett castigated investment bankers, home lenders and regulators for letting the financial system spin out of control and causing a run on Bear Stearns Cos. that almost brought down more of the biggest banks.
'Wall Street is going to go where the money is and not worry about consequences,' Buffett said during a news conference yesterday, a day after his Berkshire Hathaway Inc.'s annual meeting. 'You've got a lot of leeway in running a bank to not tell the truth for quite a while.'
Buffett and investing partner Charlie Munger also lambasted credit raters, bond insurers and policymakers for two days as a record 31,000 attended the annual affair in Omaha, Nebraska.
